Transcom: Year-end report 2014

”Transcom’s margins improved significantly in the fourth quarter, and also from a full-year perspective. We are now exiting the turnaround phase that we initiated at the end of 2011 in order to improve financial and operational stability. We now have a solid foundation from which to take the next steps, to grow and to improve profitability.”

Johan Eriksson, President & CEO
 

Key highlights

• EBIT margin improved by 4.4 percentage points in Q4 2014, from 1.4% to 5.8%. The EBIT margin in Q4 2013 excludes a €21.1 million impairment charge
• Significant profitability improvements in the North America & Asia Pacific and North Europe regions
• Like-for-like revenue increase by 3.8% in Q4 2014, mainly driven by higher volumes in the North Europe and North America & Asia Pacific regions
• Re-domiciliation to Sweden, share class merger and reverse split completed in Q4 2014

Q4 2014 financial highlights

• Revenue €158.7 million (€160.2 million in Q4 2013). Adjusted for exchange rate impact and divested operations, revenue increased by 3.8%
• Gross margin 21.9%, a 1.8 percentage point increase compared to Q4 2013 (20.1%)
• EBIT €9.2 million (5.8%) compared to €-19.0* million in Q4 2013
• EPS** 14.5 Euro cents compared to -86.2 Euro cents* in Q4 2013.

YTD financial highlights

• Revenue €616.8 million (€653.2 million). Adjusted for exchange rate impact and divested and closed operations, revenue increased by 0.5%.
• Gross margin 20.7%, a 0.6 percentage point increase compared to 2013 (20.1%)
• EBIT €21.3 million (3.5%) compared to €-5.4* million in 2013
• EPS** 26.4 Euro cents compared to -71.3 Euro cents* in 2013.
• The Board proposes that no dividend be paid for 2014 fiscal year.

* EBIT including intangible asset impairment €-21.1 million in Q4 2013
** EPS for 2013 has been adjusted to reflect the reverse split as if it had occurred 2013

Comments from the President and CEO

Transcom’s margins improved significantly in the fourth quarter, and also from a full-year perspective. Performance in the North America & Asia Pacific and North Europe regions was particularly strong in Q4. We are now exiting the turnaround phase that we initiated at the end of 2011 in order to improve financial and operational stability. Transcom has a solid foundation from which to take the next steps in the company’s development. As disclosed this morning, we have adopted a set of mid-term financial targets.

LIKE-FOR-LIKE REVENUE INCREASE IN Q4

On a like-for-like basis, adjusting for divestments, site closures and currency effects, revenue in Q4 2014 increased by €6.1 million (+3.8%) compared to 2013. The result was mainly driven by higher volumes in the North Europe and North America & Asia Pacific regions. However, all regions contributed to the revenue increase. From a full-year perspective, like-for-like revenue increased slightly, by 0.5% (€3.2 million).

SIGNIFICANT MARGIN IMPROVEMENT, BOTH IN Q4 2014 AND FY 2014

I am pleased with the significant margin improvement that we report today, both in the fourth quarter and from a full-year perspective. In Q4 2014, we improved our EBIT margin by 4.4 percentage points, to 5.8%.

Despite the challenges faced during 2014 by our Chilean operation in terms of unsatisfactory volumes and efficiency, Transcom’s full-year EBIT margin improved to 3.5% in 2014 (2.4% in 2013). This was mainly driven by the considerable performance improvement delivered by our North America & Asia Pacific region. Margins in the North Europe and Central & South Europe regions also developed strongly in 2014.

TAKING THE NEXT STEP, AND ANNOUNCING FINANCIAL TARGETS

As disclosed this morning, Transcom has adopted a set of mid-term financial targets. We target like-for-like revenue growth of at least 5 percent per year, an EBIT margin of at least 5 percent, and a net debt/EBITDA ratio of maximum 1.0. Provided that the net debt/EBITDA target is met, Transcom would be in a financial position to start paying a dividend in 2016, i.e. for the 2015 financial year. The adoption of these targets marks the exit of Transcom from the turnaround phase that we initiated at the end of 2011 in order to improve financial and operational stability. We now have a solid foundation from which to take the next steps in our development, with a strong operational and financial momentum.

I am also pleased that the re-domiciliation to Sweden of Transcom’s parent company was finalized in November 2014, given the benefits for the Group and our shareholders.  General meetings of the shareholders will now be held in Sweden rather than in Luxembourg, facilitating shareholder participation. In addition, Transcom is no longer bound by dual legal systems, which lowers costs and simplifies the execution of corporate actions. Our listing structure is simpler and less costly, as we have abandoned the SDR system. Transcom now has one single class of listed ordinary shares, directly admitted to trading in the Mid Cap segment of the Nasdaq Stockholm exchange.

Transcom’s fundamental objective is to create shareholder value through profitable growth. Our strategic priorities in order to achieve our goals are informed by our vision of being recognized as a global leader in customer experience: We aim to grow together with our clients, while also creating a more balanced industry and client portfolio; we will continuously improve our service offering, focusing on advanced, value-added services; we will seek to strengthen Transcom’s global footprint, supporting the European core market; and we will make sure that we have a competitive operational platform.

Johan Eriksson, President and CEO of Transcom

The interim report is also available for download on www.transcom.com

Results Conference Call and Webcast

Transcom will host a conference call at 10:30am CET (09:30am UK time) on Thursday, February 5, 2014. The conference call will be held in English and will also be available as a live webcast.

Dial-in information

To ensure that you are connected to the conference call, please dial in a few minutes before the start in order to register your attendance. No pass code is required.

Sweden: +46 8 505 564 74

UK: +44 203 364 5374

US: +1 855 753 2230

For a replay of the results conference call, please visit www.transcom.com to view the recorded webcast of the event.

--------------------

Transcom WorldWide AB (publ) discloses the information provided herein pursuant to the Securities Market Act and/or the Financial Instruments Trading Act. The information was submitted for publication on February 5, 2015 at 08:00 AM CET.

For further information please contact:

Johan Eriksson, President and CEO              +46 70 776 80 22

Pär Christiansen, CFO                                               +46 70 776 80 16       

Stefan Pettersson, Head of Group Communications            +46 70 776 80 88

About Transcom

Transcom is a global customer experience specialist, providing customer care, sales, technical support and collections services through our extensive network of contact centers and work-at-home agents. We are 29,000 customer experience specialists at 54 contact centers across 23 countries, delivering services in 33 languages to over 400 international brands in various industry verticals. Transcom WorldWide AB’s share is listed on the Nasdaq Stockholm Exchange under the ticker symbol TWW.